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America 27, Jim 16, Cramer 10, Fda 8, Us 7, S&p 6, U.s. 4, Roche 3, Mike 3, Dell 3, Ibm 3, Washington 3, Humira 3, China 3, Illumina 3, Alcoa 3, Cnbc 2, Lowe 2, Dr. Francois Nader 2, Seahawks 2,
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  CNBC    Mad Money    News/Business.  (2013) New.  

    January 7, 2013
    6:00 - 7:00pm EST  

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of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it. time for the final trade. scott? >> yahoo! got downgraded on fears about his reorganize plan. that is one of those times where doing nothing would be the biggest risk of all. >> tim? >> sell arco. >> anthony? >> rim into the product announcement. >> karen? >> actually talked myself into some walgreens. >> grasso? >> google. below $700. i might overstay my welcome but i got even longer after that ftc ruling on it. >> all right, i'm melissa lee. see you tomorrow, 9:00 a.m., we have the ceo of coinstar. and then more "fast money" on cnbc. meantime, "mad money"
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i'm jim cramer. welcome to my world. you need to get in the game! firms are going to go out of business, and he nuts. they're nuts. they know nothing. >> i always like to say there's a bull market somewhere. >> "mad money," you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you money. my job isn't just to entertain but to teach you. call me at 1-800-743-cnbc. at the beginning of every new year, i like to nail down some themes, some themes that could be safe -- safe places to tread on down days like today where the dow sank 51 points, s&p gave up .31%, and nasdaq declin declined .09%. these are themes that can withstand the test of circumstances around us, whether it be the upcoming debt ceiling fight -- ♪ >> or potential chaos overseas.
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just -- or just the overall sense that our economy isn't creating the jobs we thought it would. [ heartbeat ] >> this show i thought it would be important to have big themes to fall back on. rising tides that could lift all of their boat at least in the sector because we know that we've begun 2013 the way we ended 2012 -- with the endless assault of washington upon our stock market -- ♪ >> house of pain! >> plus, you also have to deal with the intellectually lazy talking heads who pontificate about things like risk on, risk off. i actually heard it today maybe four times, which is merely genuine wall street gibberish. and i did trade and invest for a living professionally that gets to fine opportunities for you. these dopes are looking at the world through some weird binary lens. a lens that says every day we're supposed to train the s&p futures, yeah.
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>> sell, sell, sell -- >> buy, buy, buy -- >> the long side, the short side. slang for we have to be bulls or britney spears -- or bears. i intend to protect you. last time, you're not running a hedge fund, you're trying to invest for the future, retirement. to enjoy life in a way that your paycheck is never going to cover. why do we need themes? because they are the quintessential non-risk on/risk off investments, things that you fall back on. we had the best at the new year for a host of reasons. let's see -- seller's remorse about getting rid of stocks because of changes in the tax code that didn't happen. how about worries that we would go over the fiscal cliff -- >> hoo -- >> or this is big -- attempts to get iras to be more tax advantaged before a hike in the capital gains rates. and we had the money that goes into stocks early in january.
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stocks are made at the beginning of the year. i make 'em, you make 'em. now we see the conclusion of short-term drivers, and we've got to return to business as usual. that's where the themes come in. each day i'm going to reveal two themes that i believe are going to dominate the market's thinking in 2013, give you the best opportunities to put money to work on the down days. not the up ones. i don't like money put to work on the up ones. particularly down days caused by the washington curse -- ♪ >> that sadly even seem to infect the great rg3 this weekend. these themes work when the market is down hard as it was earlier today before rebounding moderately. first theme, number-one theme -- the return of the banking business as an investable place to put your money. for five years now we've been under pressure, these bank stocks, under pressure -- one thing or another. it may be because they had to fight to survive or they had to flood the market with new capital, raise capital, meet the requirements, deal with the legacy of many bad loans, take
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on the federal reserve which has pushed rates so low that it's difficult for banks to make money versus the deposits you provide them. right? they lend, it's so little verse us what they're paying you, they can't make it. it's called net interest margin. they can't make enough off of them. at the end of 2012, we began to get a sense that the cloud was lifting, courtesy of a remarkable run in bank of america which doubled and then some. more on that later. as well as a recovery in the investment banks. and that continues today. i think 2013 will be a continuation of that trend. but it will switch focus. i bet the biggest gains will be in the regional banks like the ones we featured so many times on this show. first horizon, the tennessee-based regional or bb&t which could be a southeastern powerhouse this year. these companies have so many things going for them in 2013. chief of which, though, is the potential for actual revenue growth. we all know that this net
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interest margin bugaboo will be with us for some time if the feds keep the rates low. i'm predicting here and now the actual construction in small business lending by these banks could back -- could come back at the same time when the banks' investments that are on their balance sheets are resurgent. and the liabilities including the kind that bank of america put behind it today with its offloading of hard mortgages with fannie mae are in the rearview mirror. meaning legal liabilities, not the deposits that they owe you. consider this the year when loan growth trumps the scant amount that may actually be made on each loan, although i think that's going to go up, too. overlaid with the possibility that demand could actually force rates higher despite what the fed wants, and that would be terrific for bank stocks. the key name -- i flay with key. the bank by travel trust, you can follow along, the most
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undervalued regional in this country now. one that's benefitting from a remarkable resurgence in the heartland. now i'm going to return to this regional bank thing over and over again in 2013 because i think it will become evident because i think that banks are going to generate stop trading. this is new for me -- the biggest earnings upside surprises of the year. that is a contrarian view if there ever was one. the second theme tonight in keeping with the opportunities for pullback, the return of the automobile stocks as sound places to make money. here's a group led by ford and general motors that has been sick beyond belief for the last year. [ flat line ] >> do not blame the weakness that took ford from 18 to 8 and change and then as low as eight to 18 in america. we've had a remarkable renaissance in car sales in this country, going from $9 million a year in the depths of the recession to more than $15
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million last year. you know what, i think the number's poised to go even higher this year. now the -- it came from overseas with china and latin america cooling and europe outright shrinking. [ scream ] >> i think you will see substantial upside revisions to these companies' earnings when they report this time around because the united states remains strong, china and latin america are roaring back, and europe, shockingly, is stabilizing. meanwhile, both ford and g.m. have worked wonders in fixing their balance sheets. ford refinanced a huge chunk of debt last week. general motors bought back a large amount of the u.s. government-owned stock with just cash on hand. both companies are robust and remain inexpensive. historically, at least. this could be the year that ford and g.m. return to their 2011 highs. i want you in both. in 2013 we people that themes to fall back on when we get days like today. two themes that will work this year, regional banks and autos. the estimates are too low and people think the big moves are
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over. hardly. they have more room to run, and the terrific places to do some buying whenever we get hammered for no reason that has anything to do with the banks or the automobiles themselves. let's go to mike in the state that may end up having the super bowl champion. mike in colorado, mike? >> caller: boo-yah, jim. yes, from the afc number-one seed denver colorado broncos. >> and the guy, the team i am rooting for -- after the seahawks. particularly because there's a great defense. no one talks about it. they talk about peyton all the time. go ahead. >> caller: peyton manning and the team have put together a recipe for success in this regular season. and everybody's so excited. >> as you should be. >> caller: about the playoffs. absolutely. but you know, another game changer today, i've got a question about nvidia, nvda. they announced a portable gaming system which is really a go anywhere, play any time web-based system. that company has, you know,
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really got into the marketplace. they've found the need. now they're creating the need. is this going to be a game changer for -- >> i got it, i read it and thought for sure the stock would go higher. i thought for sure there would be this -- more people saying nvidia's got the greatest graphics, now they've got the greatest machine, people should buy. it you know what, mike, people don't trust nvidia. the ceo told a big story, it did not move. and i got to tell you, as long as there's secrkepticism that t quarter won't be good, the stock is going to be stuck in the mud, and i don't like the mud. it feels like the ground of fedex field. rakesh in indiana? rakesh? >> caller: this is rakesh from indianapolis. thanks for taking my education. >> sorry about that -- you give ga -- you gave it a good shot. >> caller: what about the stock ilmn. stock down by $4 today.
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is it a good time to buy? also do you think roche will extend its offer of buying il m illumina? >> my partner in the morning, david fair, is america's best reporter when it comes to business. he told people do not believe the hype about the roche bill for illumina. roche walked away, illumina is too high. i would waiting in 45 to pull the trigger. not before then. it's time to turn off the risk on/risk off babble. i'm focusing on themes that could help you in 2013. the rise of the regional banks and the return of the autos are excellent places to start. "mad money" will be right back. coming up, drug dollars. the biggest names in biotech with breaking news at the largest health care conference of the year. cramer's going straight to the source to get you the inside scoop. tonight, jim's got two exclusives. the ceos of nps pharma and exact
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sciences just ahead. and later, king of the hill. they're the two top performers in the dow last year. but 2013 isn't big enough for both of them. with the big mortgage settlement behind them, could bank of america deposit returns for you this year, or should the housing rebound keep home depot in your sights? cramer decides. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. send jim an e-mail at jimcramercnbc.com or call 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. with the spark cash card from capital one,
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week with earnings season about to begin, that's tomorrow. alco-a. i don't want to lose side of the gigantic health care conference that continues through the week. this is where the biotech and
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pharmaceutical companies tell their stories like celgene, one of our favorites, fell $3.54 on its positive performance. i want to give a peek at an intriguing story you'll hear a lot about on wednesday. i'm talking about nps pharmaceutical, nps, this is an orphan drug developer that's been a roller coaster of late. i first recommended nps back in mid-september when the stock was trading at $8.24. it spiked up to $10.86 in october, giving you a quick 31% gain. i told you to ring the register because there was an important fda panel meeting coming and any potential upside seemed to be baked in. since then the stock pulled back, just $8.95. about 70 cents above where i initially got behind it. even though the stock hasn't rallied much, there have been major positive developments. for starters on, december 21, nps received fda approval for a treatment for an ultra rare orphan condition called short bowel syndrome. patients need to be fed
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intravenously for ten to 1 2 hours a day because their intestines can't properly absorb nutrients. even though a few hundred people have the condition, it could do $350 million in peak sales because nps plans to charge $295,000 for it. yes, i know, that number may sound sky high but it's par for the course for orphan drugs since they provide benefits to quality of life and have no real competition. when you consider nps with the market capital of $775 million, stock seems cheap and a potential opportunity. that -- that's just from this one drug. mps has another for the treatment of high oh parathyroidism that could be approved next year. there have things that could derail the story which is why i call it speculative. given that the main drug has been approved, the stock's barely budged. interesting opportunity. don't take it from me. we'll talk to dr. francois nader, president of nps pharmaceutical, about the prospects. welcome back to "mad money." >> thank you, jim. happy to be back.
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>> all right, doctor. as soon as people hear this price tag, $300,000, they go nuts because we got this fiscal crisis, we've got a debt ceiling discussion, we've got senator mcconnell saying, listen, we got to find ways to cut entitlements. isn't this smack in the middle of that debate when you're charging $300,000? >> well, we charge $295,000 because of really three things. one, the burden of illness of the condition you described, $200,000 to $600,000 a year is the cost for each one of these patients. we charge $295 because of the value that gattax brings. reducing the nutrition, 15% of patients getting off of nutrition altogether and improvement in the quality of life. and third, there's a premium associated with treating only 3,000 to 5,000 patients in the u.s. >> so the insurance companies
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would actually favor using your drug than doing what they're currently doing for these people. >> that's exactly right actually. 100% of the payers said that they would reimburse gattex. 76% of the physicians said that they will prescribe gattex independent from the cost. and about 100% of the patients said they will try gattex. >> let's go over when people talk about cutting medicare, when people talk about reining in costs, if you didn't take this drug, what would your life be like versus taking the drug? >> well, you can see it from a direct cost perspective. the $200,000 to $600,000 a year. but what is extremely important is with gattex we hope patients could get off of parental nutrition and go back to work and into society. >> what is that worth to society? what is that worth to people? it's difficult to put a price
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tag on it, isn't it? >> it is difficult, we try do our best. this is why even though it appears to be an expensive drug, it is really in the middle of the fair way of the orphan drugs' pricing. again, very small number of patients, long development time. but more importantly, the value that we can bring to patients, to payers, to physicians, to society. >> how do you find out how many people have this condition, and initially i would imagine they would be afraid that they couldn't afford the co-pay, which i think you're doing something it, right? >> absolutely. it is a commitment of our company, a personal commitment of mine that no one patient would not have access to gattex if they need it because of cost. so we have established a very comprehensive patients assistance program that will take care of the co-pay for patients who have a co-pay and, frankly, will get the drug for free for those patients who don't have the ability to pay
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for it. >> all right. now i want to -- again, for people to understand this debate about health care. in other words, you're willing to let the patient have what he can't or she can't afford for free in order to be able to milk -- to make it so that they are able to have a better life? >> it's a commitment that we have. that our 3,000 to 5,000 patients and every one of them who is eligible should get the drug independent from whether they can afford it or not. >> last question. when you mention this price tag to people out there, savvy investors, do they understand why it may actually be a bargain for those who are paying for it? >> some of them do, some of them don't. but in general, when we explain the rationale behind it, they get it. >> that's all that matters. dr. francois nader, president and ceo of nps pharmaceuticals. congratulations on getting approval, and thank you for explaining that price tag because it makes a lot of sense to me. good to see you, sir. >> thank you, jim. always a pleasure.
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>> orphan drugs have different prices from all other kinds of drugs. they're specialized. you just heard the risk/reward here. this one saves the system money. you may not like the system, but it does save them money. nps pharmaceuticals. stay with cramer. coming up, king of the hill. they're the two top performers in the dow last year. but 2013 isn't big enough for both of them. with a big mortgage settlement behind them, could bank of america deposit returns for you this year, or should the housing rebound keep home depot in your sights? cramer decides. and later, best medicine? cramer's got more from the floor of the largest health care conference of the year. will these health headlines bring you some profit? don't miss jim's exclusive with the ceo of exact sciences just ahead. all coming up on "mad money." how do you
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2012, it's over, and that means the post season's arrived. regular season, done. whenever a new year begins, i like to look at the best performers from the previous year, see which continue to surge higher. isn't that natural? i also like to make the investing game as accessible as possible. which is why this week we're going to look at 2012's biggest gainers through the lens of a different game -- football. football is my life.
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the nfl playoffs have just begun. we're going to have our own playoffs here on "mad money," pitting the best performers in the dow jones average and the s&p 500 against each other until we wean it down to two contender for our annual stock super bowl. if you want a football parallel, think of the s&p 500 as the afc and the dow's the nfc. although it's tough to talk about the nfc after watching rg3's knee give out. the huddle, that was something. tonight we start with the dow jones conference finals. with the two best performers in the index from 2012, they'll duke it out to see which makes it into the super bowl. as i like to say, you've heard it before, preparation is separation. no, actually, russell, president wilson, says that from the seahawks. a little preparation is the sincerest form of flattery. last year the two biggest gainers were bank of america, up 109%, and home depot, up 47%. i think these are terrific stocks poised to do very well in 2013. say that right up-front. you could happily own both bank
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of america and home depot in a diversified portfolio, no problemmo. but the whole point of this exercise is to teach but comparative stock picking. that's what i know so many of you worry about and don't know how to do. it shows you what makes one name better than the other. name being slang for stock. if you put a gun to my head -- first i'll tell you to take the gun away. if you made me choose, i'd tell you i think that bank of america is the better buy. actually i have a little more hair here. i mean, just pointing that out. why bank of america? why not home depot with its fabulous management, incredible execution? mainly it's because of the sector. remember, about 50% of the stock's movement has to do with the sector. it's actually higher in 2012. i think 2013 could be a terrific year for the big bracket banks, as well as the regionals. hey, bank of america, one of the biggest. don't forget the merrill lynch. let me tick down the regions. first of all, the economy's continuing to recover. the housing market's rebounding, consumer lending's improving.
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even jobs and business investment are coming back, albeit slowly. the latest fed report was so optimistic about the u.s. economy that it actually sparked fears that ben bernanke might let rates rise sooner than expected. something that would be fabulous for the banks if it happened, but caution, i don't think it's going to because the -- ben just told he's going to keep rates low until we get to 6.5% unemployment, that's pretty far. second, many of the worries that have been holding banks back are in the rearview mirror. objects turned out to be further than you thought they were in that thing. hence, the big end of year bank rally and bank of america's stellar form nature 2012. right there, the non- stop catastrophe that was the european financial system, seems to be stabilizing. no real risk of contagion anymore. we managed to bridge the fiscal cliff. and i think we may be able to reach peak financial regulation in this country over the course of the next nine months as the last three major parts of dodd-frank will be clarified by
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the regulators. i'm not as worried about the debt ceiling as everyone else because everyone else is worry good it. we got news, the big banks reached a settlement on the morning put-back issue with. fannie mae forking over $6.5 billion and selling back mortgages to fannie. and the problem gets put to bed. no more spending huge sums on legal bills, at least of the major ones i believe. no hear resign risks that makes investors to go to bed with this stock in their portfolio. and bank of america sold $200 billion in troublesome, i think, mortgage service rights to nationstar mortgage. the rights are confusing. suffice to say it was good for everybody. they sold these assets, and it's good for nsm and for bank of america. sure, all of the big banks and bank of america have run a lot lately. the stocks are still well off the all-time highs. and actually well off the highs of a couple of years ago. and i think as things get better in 2013, as people realize that so many of the worries that have
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held the banks down for so long are in the past, these stocks will continue to climb higher. the sector isn't the only reason i prefer bank of america to home depot. even though people are used to thinking of one went as a dog, there's a lot going for it. first of all the company's been restructuring, taking out huge costs. cleaning up the balance sheet under the excellent leadership, yes, i will anoint him as excellent because he's gotten through this period. most people couldn't, brian m e moynihan. analysts expect that bank of america is in good enough shape that it will get approval from the government to return more cash to shareholders in march. and either via bigger dividend, maybe a buyback, maybe both. plus bank of america's been taking share, starting to have low growth again, that's a first. the company is a housing kicker. as they're a big player in the mortgage business and own foreclosed properties, that goes down almost every day. you know i prefer wells fargo for this particular business. we're only looking at the best performers in the dow so wells is not in the running. it reports friday. most people think it's not going to be good.
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now even though bank of america was up 109% last year the stock trades at a 3 % discount to the tangible book value. in other words, it's still cheap relative to how much cash it has on hand. not only is bank of america improving, but there's a lot of room for improvement which means it has room to run. yes, my charitable trust -- it didn't do a good job with. it you know what, talk about the goodness, charitable trust beat the stock market last year with the s&p. this was one i did not handle correctly. how about home depot? this is very different situation. here's the best of breed home improvement retailer with a great balance sheet riding a theme still in the early innings, that's the housing recovery. home depot's latest quarter was phenomenal. the company should be getting a major boost from hurricane sandy. people in the northeast need to make major repairs to their houses. i am a huge fan of home depot, as you know. since the show started, i am. i think it goes higher this year. even if it's trading at 18 times next year's earnings, right below the peak historical multiple of nine times earnings. the company is up against
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difficult comparisons. it did so well this time last year that the bar was set very high. that could make it harder to top. the win big competitor, lowe's, seems to be screwed although we got a back low today. and the street isn't convinced that lowe's is going to take them on. you know, look, home depot's run a lot. the difference between bank of america and home depot is simple. home depot is what i call a straight-a student. it's -- if it keeps getting as, this is good student. bank of america, it was a c-minus student that's becoming a b student. and that kind of improvement is the kind that we cheer for. the kind that the market tends to reward with a much higher share price. here's the bottom line -- look twoeg best performers in the dow jones conference during the 2012 season, bank of america and home depot, i'm a big fan of both stocks. but i think bank of america has more upside for 2013. which is why it moves on to our stock super bowl to be held later in the week. unfortunately, without beyonce. i'm told she's just too busy to come to the "mad money" set on
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friday evening. anyway, let's go to chuck in south carolina, please. chuck? >> caller: yeah, chuck, hi, jim. >> man, i liked you guys in the bowl game. dynamite. what's up? >> caller: i'm in hilton head, south carolina. and if you're ever in the neighborhood, please give me a call. i'd love to have you as my guest at the clubs. we've got some of the best golf in the world. >> you got to be careful. i almost ruined the canoe whole course when i went there. divots everywhere. go ahead. >> caller: my divot goes farther than the ball. i bought lumber liquidators, i bought 20 and change. closed friday at 53 i think. i sold some, i got my original investment back. i love it. i did the -- i used them personally in my home. they were great. the prices were good. the -- incredible selection. ten times more than anybody else. they were there, they set ten to 11,between 10:00 and 11:00, they had their own installers.
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they couldn't have done a better job. was a wonderful experience that we don't have much today with the way things are. >> do you know why that? they are a dying operator which is why i put them on the show. i totally agree. you've already done the right thing. you've taken out the cash. that's one of cramer's rules. you let the rest run. i agree, l.l. is a terrific company, and they're always welcome. the first time on tv. first on cnbc, but i like them. let's go to lenny in california. lenny? >> caller: hi, jim. happy new year. >> same. >> caller: yes, i'd like to know about hewlett-packard, h.p. it was lousy in 2012. what do you think it will do in 2013? >> well, i man -- down 44%. did i ever put my colleague david faber on the spot today -- what do you think of hewlett-packard? here's what i want to say about hewlett-packard. i like dell more. how's that? that's about all i'll say right now. in the battle between bank of america and home depot, the big bank moves on to the super
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bowl in new orleans. hey, listen, we're not ready to crown a winner. we don't know yet who is going to win the s&p. and that's what is going to determine who eventually gets into friday's super bowl. don't move. lightning round's coming up next. keep up with cramer all day long. follow @jimcramer and follow mad tweets. ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪
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whatever your business challenge, dell has the technology and services to help you solve it.
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lightning round. [ indiscernible ] the lightning round is over. are you ready? mike in new york, mike? >> caller: hey, jim, calling from rochester, new york. >> man, i love it. >> caller: my stock is acn, accenture. >> i've been talking about forgiveness. and i think that accenture will be forgiven for the last bad quarter. and i want to be a buy, buy, buy. al in california? al? >> caller: big boo-yah from
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bakersfield, call, mcgraw hill corporation -- >> i like bakersfield. a more focused company. let's go to samantha in north carolina. samantha? >> caller: hello. >> hey, sam. you're up. >> caller: yes, i'd like to know what your feelings are on the silver coin in the s&l -- the slb? >> you know, i got to tell you, i've always been a gold fan. i know somewhere we're up in gold this year, i know, but people think gold's in a bear market. they're wrong. buy, buy, buy. pull the trigger price. let's go to don in new jersey. don? >> caller: yes. who a how are you, jim? >> pretty good, how are you? >> caller: good. i've got the blue today. i've had it for six years. >> it took me six years to get over the flu. what's up? >> caller: listen, i've been a favorite of yours -- hudson
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citibank. >> no, we're done there hudson city. time to erase and move on. that trade is done. i want you to go to key. why? mike in arizona, mike? >> caller: thanks, jim. from the arizona wildcat country, we're the number-three basketball team in the country. >> we have arizona wildcat people in the building. what's up? >> caller: real quick, i'd like to get your take on how you think the fiscal cliff and the debt ceiling are affecting stocks like ibm and where you think ibm will go in 2013. >> well, frankly, i think that ibm's a victim of spending worldwide. ibm is owned by my charitable trust. and we hope it goes to 180 so we can buy more. i think it's a good stock. i needing to to see chris in michigan. chris? >> caller: jimbo, boo-yah, buddy. >> back at you. >> caller: listen, berkshire hathaway class-b stocks. i have a lot of it and want to buy more. what do you think? >> i totally agree.
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it's a play on two big themes -- insurance and housing. >> buy, buy, buy. >> warren buffett is the man. i'm a buyer. that guy who said the nasty things about him this weekend, he should take those back. that was wrong. let's go to stan in florida. stan? >> caller: hey, big boo-yah to you, jim from sunny naples, florida. and also a huge roll time. >> boy, i was going with the fighting irish look. i'm neutral billion this. go ahead. >> oh! >> caller: can't be neutral with the tie. emerson electric. >> man, i think you could be for the tie, for the irish, but you should be for emerson which is a china play, and it's coming back, and i believe the ceo is going to put up some definitely good numbers and do some restructuring. he's going to make it so that stock stays higher. and that -- ladies and gentlemen, that is the conclusion of the lightning round. >> t"the lightning round" is
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sponsored by t.d. ameritrade. coming up, best medicine -- cramer's got more from the floor of the largest health care conference of the year. will these health headlines bring you some profit? don't miss jim's exclusive with the ceo of exact sciences, just ahead. cer ] this is joe woods' first day of work. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade. nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies.
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not only does this week kick off earnings season, but like i told you earlier, we have one of the most important conferences of the year. the big jpmorgan health care shin dig which start today. and tonight i'm giving you a preview of what's to come. wednesday we're going to hear from a small speculative diagnostics company called exact sciences, exes, with a product that could save tens of thousands of lives. every year people die of colon cancer, the second most lethal form of cancer out there. tragically, colon cancer is among the easiest to treat if it's caught early. that's why once you turn 50 you're supposed to get a colonoscopy every decade to screen for the disease. the problem is, half of all americans in that demographic don't follow the guidelines. nearly 40% have never gotten a single colonoscopy.
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the reason is pretty easy to understand -- getting a colonoscopy is -- say difficult procedure. it's invasive, it's uncomfortable. and if you have to fast while drinking gallons of colon cleanse beforehand, people balk. they don't want to do it. this is where exact sciences comes in. they've developed a totally noninvasive stool test. collect a sample at home and send it to the lab. that can detect colon cancer with over 90% sensitivity. it can catch precancerous cells, too. the test will never replace getting a colonoscopy, but it can tell whether you need one and could ultimately help catch colon cancer much earlier. so far the data's been pretty darn positive. the fda's expected to render a decision on whether to approve the test next year. almost as important, the government agency that overseas medicare reimbursement's reviewing the test parallel with the fda which means they can decide whether or not to pay for it right after it potentially gets approved. that said there worries about competition, the possibly high price of the test. however, i think this is an intriguing opportunity.
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they got behind this, exact sciences, in october, 2010. the stock is up 30% since then. if all goes well, and that's a genuine if, it will have more room to run. we'll check in with the president and ceo of exact sciences to find out about the company and where it's headed. mr. conway, welcome back to "mad money." >> jim, thanks for having us on your show. a quick thanks to the team at exact sciences who's working so hard to get this test approved by the fda and to make it available to the public. >> that's why i want to start with, sir, we have got a big debate in washington coming up about spending. and everyone keeps talking about medicare, holding back the cost of medicare. i've been saying that we are the united states of somewhere. it's taking up so much of the budget. your test would save fortunes, and yet here we are having to wait until 2014 for the fda. why if we are trying to rein in the cost of medicare do we have to wait for 2014? >> well, jim, i think in your
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introduction you really framed the problem right. let me emphasize one thing, that there are 150,000 new people every year diagnosed with colon cancer. and 75% of them are medicare patients. on average it's about 140,000 dollars to treat a patient through death on medicare. and the cost of new drugs are skyrocketing. what the fda and cms, the medicare system, have done is something really unique. that is to work together in a parallel process. they invited into the program. we're the first company that we're aware of that is in the program, to actually bring the test to market sooner than it would be brought to market along with medicare coverage. so this is a big deal. we really appreciate what the fda and the medicare system have done to get creative here. >> well, if that's the case, i
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still don't get why we can't have a shot at it in america to save us money and to save people lives by mid year 2013. >> well, so one of the things that we decided to do really early on was to do this the right way and run the right clinical trial. and jim, we're -- we've already enrolled 12,700 patients into this clinical trial to get the evidence that we need to really make sure that this is a broad screening test that is safe and effective for all patients. that data will be available this spring. and then it takes time for the fda to review that, and i tell you, the fda has done a really tremendous job of prioritizing this. and you know, i really think it's an example of where the agency is doing things in a really positive, terrific way. >> is there a way that you could go to congress and tell them, listen, it really is possible to
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keep health care cost down, but your company's not a big company. lily, bristol myers, pfizer, they've got fortunes to be able to do these tests. i am afraid that the exact sciences of the world with these terrific ideas don't have enough money to get through this gauntlet. >> you know, that may be true of some companies. it has not been the case with us. you know, let me just take you back to the concept of this test is to be able to detect a precancerous polyp the size of the tip of this pen. one centimeter. it may take eight to ten yearsing to to see actual stage-one cancer. by being able to detect that precancerous polyp invasively we think we can get a significant uptake in the number of patients willing to get screened. fda is working with us. medicare is working with us. providers are excited about this. and we really think that this is an opportunity that is unique
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and will set a new path for new diagnostic companies to help take cost out of the health care system. >> one last question, kevin. this is revolutionary. i'm wondering, are there other cancers that can be detected through a similar science than exact sciences has? >> so the incredible thing, jim, is that at exact sciences we are collaborating with the mayo clinic to be able to detect pancreatic cancer early, as you know, being diagnosed with pancreatic cancer is a death sentence. >> right. >> and esophageal cancer. all from the same sample. we're really focused on this and creating long-term value for patients. and also long-term value for somewhe shareholders. >> kevin, i want to thank you. we've got to spread the word about what you're doing. kevin conroy, president and ceo of exact sciences. thank you very much, sir. >> thank you, jim. take care. >> all right. you see where you can go -- fiscal cliff, debt ceiling, how about guys like kevin doing
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amazing thing. exact sciences. if this comes true, in other words, the fda gives the permission, you can see how big this can be. i like this story. stay with cramer.
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forgiveness raines! as we go to earnings season we have a new positive attitude. the notion that just because the stock instantly disappoints --
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>> crying ]. >> doesn't mean you can write it off a couple of days later. take disney. try as i did to urge people ton sell disney after a weak quarter, maybe not, the stock did dip 10% when it reported. it's come back with a vengeance. in part because people are wise to how smart their acquisition of the "star wars" franchise was. in part because the ceo has a fascinating habit of addressing whatever weaknesses there are in the core enterprise. disney's been forgiven and will stay forgiven even as it got dinged on a story that should not have been viewed as negative. be a buyer. tremendous farm equipment was thought to have run out of gas after the last quarter. company threw cold water on the future, highlighting slow sales outside the u.s. people seemed to put that negative well into the rearview mirror, and it's been on a tear ever since. they could give it back in the report next quarter. in the interim we'll see a strong crop report and farm spending worldwide recover. remember mosaic? they reported a disappointing
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quarter last week. the stock didn't blink. it's the market that's benign, not individual stocks. didn't is seem like everyone decided to abandon ship after the last discover financial services quarter? forget that. it's been creeping up as part of a continual paper-to-plastic trade in a group that included ebay, thought to have a weak quarter. caused almost 10% drop. now it's up 10%. we're trying to figure out why wye sold it. wasn't paypal. the credit card division is plain on fire. then there's 3m. lots of analysts thought, oops, the company's slowing down when the last quarter was reported. now, though, the stock made a new high today. i can't even remember why anyone thought there was a slowdown. and that last quarter looks like a springboard for 3m stocks to go even higher. hey, taking out the record high, did it today. i think it goes to 100. math's really good there. why does this matter? tomorrow earnings season begins with alcoa's quarter. i have to wonder if the initial reaction if it's negative could be a chance to get in based on this new forgiveness principle.
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alcoa has moving parts from construction to cans, gas turbines, aerospace. the back of an apple ipad. what held this one back is the core business of making aluminum. there's been a global aluminum glut. you got to wonder whether the actual commodity might go up in price if there's a worldwide recovery going on. and i believe there is. also there's currency risk. that's why i think that before you boot the stock after it's had a bit of a run, while it might seem like a disappointment, remember the disneys, deeres, discovers, they've bounced back. perhaps buy alcoa if it gets hammered. that might seem smart in the trade ahead of the quarter but in this market it could be a terrific investment after the news. stick with cramer. ♪
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